NPCI published a frequently-asked-questions note on 15 September 2026 setting a merchant discount rate of 0.4% on person-to-merchant UPI transactions above ₹2,000, effective 15 October 2026. Payments funded by a credit card on UPI are outside that framework.
What changed
| Payment | Merchant charge from 15 October 2026 |
|---|---|
| UPI P2M, up to ₹2,000 | Zero |
| UPI P2M, above ₹2,000 | 0.4%, capped at ₹300 once the transaction reaches ₹75,000 |
| UPI P2M above ₹2,000 in designated categories — railways, telecom, insurance, fuel, and utilities such as electricity and water | Flat ₹5 |
| UPI P2P transfers, any amount | Zero |
| Credit-linked UPI (RuPay credit card on UPI, pre-sanctioned credit lines) | Outside the 0.4% framework — the underlying credit product's rules apply |
NPCI's FAQ states that transactions up to ₹2,000 are more than 95% of UPI P2M volume, and that small merchants classified under P2PM — those receiving up to ₹1 lakh a month through a UPI QR code into their own account — keep zero-MDR treatment. Consumers pay nothing: UPI apps may not levy a platform fee, and merchants may not add the MDR as a separate UPI charge. Existing UPI AutoPay mandates — SIPs, insurance premiums, utility bills, OTT subscriptions — do not carry the prescribed MDR.
Who is affected
No cardholder is. The funding source decides which rulebook applies, so a RuPay credit card linked to UPI on the HDFC Bank UPI RuPay card or the RuPay variant of the IndianOil HDFC Bank card is billed exactly as it is today. What moves is the gap merchants see: NPCI's FAQ puts credit-card MDR at typically 1.5–2.5% and debit-card MDR at up to 0.90%, against 0.4% capped at ₹300 on UPI — ₹200 against ₹750 on a ₹50,000 bill at 1.5%.
What to do
Nothing on 15 October. The decision worth restating is the one at the pump, because fuel is a flat-₹5 category and the merchant's incentive barely moves: paying by card still beats bank-funded UPI by the whole reward. ₹3,000 of monthly IndianOil spend on the IndianOil HDFC Bank card earns 5% of spend as Fuel Points — 150 points, exactly its post-six-month ceiling, worth ₹144 at ₹0.96 a point on fuel redemption — plus about ₹30 of surcharge waiver: ₹2,088 a year against a ₹500 fee. The same ₹3,000 over UPI from a bank account earns nothing. Our BPCL Octane vs IndianOil HDFC comparison computes where each fuel card wins, on the assumptions in how we compare cards. Watch the card's own exclusions rather than the MDR: several cards pay no rewards on fuel bought through UPI, and that is a card term, not an NPCI one.
Sources
- Business Standard — UPI MDR explained: How new charges compare with debit, credit cards — published 16 September 2026
- Business Standard — UPI MDR from Oct 15: Will your SIP, automated insurance payments cost more? — published 16 September 2026